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Protecting your business from wage and hour disputes

On Behalf of | Jul 28, 2020 | Employment Law

In recent years, employers and their pay policies have been under increased scrutiny. With the number of wage and hour lawsuits rapidly increasing every year—rates of these cases have risen over 400% since 1997—it is essential for you to know the law and proactively protect your business from these disputes.

Make sure that you classify your employees correctly

Under the Fair Labor Standards Act (FSLA) and California Industrial Wage Orders, employers must classify employees as exempt or non-exempt. Misclassifying employees as exempt or independent contractors can put you at serious risk of a lawsuit, so it is essential that you classify your employees correctly and periodically review their classification if their job description or position changes.

Keep detailed records

Tracking and documenting employees’ work and pay can help you protect your business from future claims. This documentation provides evidence if an employee brings a wage or hour dispute against your company.

Be sure that employees understand company policies

Your employee handbook can be a vital tool in protecting yourself from wage and hour disputes. Consider adding statements prohibiting off-the-clock work, requiring employees to record all time worked as well as when they clock-in and clock-out for meals, and detailing meal and rest policies in clear language. This will make your policies clear to your employees and protect you against future liability.

Stay up to date on local laws and update your policies accordingly

The landscape of employment law is constantly changing. Keeping up with these legal shifts is key to maintaining your compliance. Some companies perform periodic audits of their wage and hour practices, employee classifications and timekeeping practices to ensure that their company has the correct policies in place and that managers are following those policies. While these audits can be daunting, they can help identify existing risks and ensure the company’s continued compliance before a legal issue arises.